As a testament to the true Canadian spirit hardy Edmonton home buyers braved FREEZING temperatures last month pushing sales to the second best January on record. It was so cold that the keys in the keyboxes that REALTORS use to show homes were literally sticking to my fingers when I took them out. The keybox containers were so cold that minor surgery could have been performed on my hands after holding them for a few minutes and I wouldn’t have felt a thing. Usually when the weather goes below -20 buyers aren’t interested in trudging through snow and cold to see houses. All things considered confidence in the market seems strong.
So what’s happening here? Prices rose, so did inventory, so did the number of sales, so did the time on market. You don’t usually get every stat going up at the same time! So where exactly do we stand? The inventory is the highest it has ever been in January in Edmonton, the previous record was 5490 in 1996. High inventory means there is lots of choice for buyers, it also means that many of the properties on the market will not sell based on current sales.
As you can see, even with good sales, inventory remained high.
The sales to new listings ratio dropped back into "buyer’s market" status. In other words, even though there were lots of sales, there were enough new listings in January to keep the ratio low. On the other hand, the ratio is typically fairly low in January.
So where do we go from here? Some expect prices to rise moderately, others expect pricing stability, others expect turbulence (up one month down the next). I think it will be somewhere between turbulent and stable… there are lots of buyers, reasonable affordability, and lots to choose from. All in all it should be a good market to be in… unless of course you’re one of those sellers who needs to sell, and isn’t successful.
Lastly I always like to keep things in perspective… yes, prices are up over December, and they are up 9.3% over last January. But January’s average price is still down from the overall average for 2007:
As a testament to the true Canadian spirit hardy Edmonton home sellers braved FREEZING temperatures last month pushing inventory to THE best January on record.
No offense. But the truth is mixed and it depends on your perspective.
Bunny, if you read past the first paragraph you’ll see pretty much the rest of the article is about the inventory levels.
Wow, I was starting to consider going house-buying this winter until I saw this information. Prices have come down, but I’m afraid things still look too sickly to invest my money today. Thanks Sara for all of the analysis – I really wish EREB would provide this level of detail. How do we get the EREB to provide the same stat reports that the CREB sends out? Do we need to pay somebody over there more money?
In Calgary, despite the high inventory, prices going up again in a hurry.
$10,000 in a month looks good to me. We are next going up here, in Edmonton.
You’re very welcome….why do you need EREB to provide the info when you can get it here?
It would be nice if the “official voice” of Edmonton’s real estate market was able to provide a better report than they currently do. Since the EREB is the source of information for so many people and so many media outlets – I think they should be providing clearer information, more statistics, more balanced analysis and less blatant advertising for REALTORS. What do you think Sara, could the EREB do a better job?
I total agree with Jeff on his post, the EREB should be providing a more unbiased and meaningful report for the Edmonton realestate market to better articulate the market. They really do way to much of the “Realtors this, Realtors that” when they should just be stating facts with informative analysis rather than the white wash quick and dirty they currently do.
Sheldon and Sara:
Could you enlighten me on two things?
Suppose that I have a rental property other than my primary residence,
1) Say I paid $200k for the the rental property and will sell for $400k ten years later, how is the tax calculated. I know that the capital gain for stocks is 1/2 of my income tax rate. Does real estate appreciation enjoy the same tax benefit?
2) Can I claim the interest expense of my rental property as a tax credit against my salary income?
Thank you very much!
Tauren,
Youa re getting ahead of yourself. Hire an accountant.
First, you pay 50% tax of the capital gains. (income doesnt matteR). Therefore, If you make 200k, you will have to pay 100k in income tax.
Second, yes, you can write off some things on your rental property, but you will also have to claim the income you are receiving as rent. Like I said, sometimes this isn’t worth it and hiring an accountant for 500 bucks is WELL worth it.
Very informative graphs. Looks like the first half of 2008 still has good opportunity to buy. 2007 was crazy.
Kendal, you are misinformed.
Here are some good explanations of investment taxes in Canada:
http://www.milliondollarjourney.com/how-investing-taxes-work-part-1.htm
http://www.milliondollarjourney.com/how-investing-taxes-work-part-2-dividends-and-interest.htm
Note sure but I’m pretty sure the SFD home price feel for yet another consequetive month. And I presume the mix that is selling has shifted to condo’s and multifamily. With the massive supply coming on stream I suspect it’s just a matter of time before we start to see price declines in this area as well.
Nate,
He is talking real estate, not investments. There is a difference. That is also talking about preferred capital gains. The only way he wouldnt pay the 50% on his RE capital gains is if it was primary residence. Which it is not.
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It seems that with the drop in people moving to Alberta and the high inventory we will see continued downward pressure on the prices.
“The most significant factor contributing to the construction slowdown is a drop in people moving to Alberta.
Escalating housing prices — the estimated average MLS price for 2008 in Calgary sits at $429,000 — are forcing a number of recent arrivals to Wild Rose Country to return to their home province.”
http://calsun.canoe.ca/Business/2008/02/05/4827887-sun.html
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Good post Bad.
Yeah and why are people not coming to Alberta. Beacause regardless of our good job market, and major inventory list that’s the same size of our GDP, it’s not worth it when they can’t afford a house.
Kendal,
Please do some reading.
http://www.taxtips.ca/personaltax/realestatesales.htm
It’s a capital gain, you only pay tax on 50% of the difference between the purchase price and the final sale.
That does not result in the government taking 50% of the profit, unless you’re in that prized 100% tax bracket
I read the links and I am now pretty certain about how the capital works.
Now my question is about the second part. Say my mortgage interest cost is $10000 per year for the rental property. Will I get a tax refund of $10000×25%=$2500 for that?
Kendal, thanks for the help. But I am not ready to hire an accountant yet, since I haven’t made such an investment. I am only trying to see whether such an investment makes sense to my financial situation or not.
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“The idea that housing prices have nowhere to go but up is, in other words, a statistical illusion.
It’s an illusion, though, that has powerful effects. Clearly, it encouraged the speculative buying of the past few years. And it has also made sellers remarkably hesitant to cut prices, which has led to the huge backlog of unsold properties. Eventually, sellers are bound to realign their expectations with reality by trimming their asking prices. That will hurt people who were fooled into reckless speculation by assurances that investing in houses offered risk-free rewards. For most people, however, a decline in prices needn’t be so painful. If you’re planning to sell your home and buy another one, an over-all decline in housing prices leaves you no poorer than before. And, if you’re staying in your home, a drop in value can actually make things easier by lowering property taxes and insurance costs. Look at the bright side: at least you’ve got a roof over your head.”
http://www.newyorker.com/archive/2006/10/30/061030ta_talk_surowiecki
Could it be that the high inventory we are experiencing now is the mentioned backlog? The sellers do seem to be hesitant to cut prices.
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Tauren,
Rental income is offset by rental expenses. For example, say you had $12,000 in annual rent, and $10,000 in mortgage interest and other expenses on the property. You would add $2k onto your regular income for the year and pay tax on the $2k at your marginal rate.
If you report a loss on your rental property, providing that the property isn’t in a corporation, then you can claim the loss against your personal income for the year.
Hope this helps,
FT
Anyone looking to buy should wait till summer and these prices will seem like a pipe dream. Inventory levels are simply too high (buyers this month were ‘suckers’) Until someone can provide a logical explanation how inventory will fall .. we keep going down from here.
What are people’s predictions for inventory this summer? Do we hit 15k or even 20k?
Pete… Couldn’t agree more. Where is all the commentary regarding being worried about a rush of listsing coming back in January. About going into the spring season with already high inventory levels. Where is that commentary in the media. Can’t wait until March or April when they have to say stuff like SFD home prices are down 5% year ove year. It’s coming….
K
Back in 2005 when a brand new 1400 square foot home in Rutherford was 220K, prices were too high then and the hold outs waited. The hold outs will always be waiting. Renting has it’s advantages. Increased mobility, no repairs, cheaper insurance, lower overall monthly bills (usually).
But take a look at how many rich renters there are at retirement age. I have no stats, but I would bet that there are very few long term renters with net worth that is equivalent to home owners. Homes will always be in demand and people will do what it takes to buy a home of their own. The psychological factor alone of perceived ownership is huge. Even though the bank owns the damn thing, as long as those payments are made, there is a perception of freedom. Home prices aren’t going down, unless you can convince the land owner, developer, plumber, roofer, electrician, framer, surveyor, sales person, and everyone else involved in the construction of a house to take a 20% pay cut. Look at the trend among younger people. There are fewer young people taking up trades and instead going into white collar and IT type jobs. That means tradespeople will and deserve to be paid top wages to build our homes, roads, schools, and everything else that we take for granted. Our tradespeople are in demand all over the country and almost everywhere outside Canada. Prices are going up, up, up…
Sorry to burst your bubble Ken but SFD prices have been falling since May. And yes home ownership has it’s advantages, but when the supply of places to rest your head exceeds household formation in the underlying location you’ve got problems. And I suspect the housing supply in Alberta has done just that.
Ken,
You’ll see a lot of people with huge net worths renting in large Cities.
Around the world renting is pretty standard and home ownership isn’t as common.
I spend less than 10% of my after-tax income on rent here in Edmonton. I’m saving a hell of a lot of money waiting to buy a house.
Retiring in my mid-30′s sounds a lot more interesting than dropping 400k on a shoddy home in Terwilliger Towne right now. Of course, kids might force my hand, but I’ve still got some time!
Nate either you have an amazing job at $15,000 a month net (given average apartment rentals) or wicked cheap rent. Either way I’d love to have your job, or your landlords contact info to hand off to a few co-workers.
Sorry couldn’t help myself
LOL, yeah Nate. How is that cardboard box treating you and/or your 300k/year job in your 20′s. Most people aren’t willing to live in cardboard boxes or with 6 other roomates and sleep on the floor. The lifestyle choice is yours to make but it can be argued that it is no way to live. Also, most people can’t score 300k/yr jobs period let alone in their 20′s so it rules out living in a half decent place and paying 10% of income for rent.
Paying $900 a month in rent near southgate mall.
More expensive than the rent that I was paying 2 blocks from the ocean in Vancouver last year, but the work is better.
It’s less than 10% of our household income even when including all utilities and tenant insurance etc… We’re happy DINKS (double income no kids…)
Can’t complain too much about the cardboard box. It’s not as nice as living off of Ocean Ave in Vancouver. But we’ve got a nice on-site gym and a freshly renovated suite.
Nate,
I am assuming your education is not in Finance or Accounting?
Here is what you stated:
Kendal,
Please do some reading.
http://www.taxtips.ca/personaltax/realestatesales.htm
“It’s a capital gain, you only pay tax on 50% of the difference between the purchase price and the final sale.
That does not result in the government taking 50% of the profit, unless you’re in that prized 100% tax bracket
”
TAX BRACKET DOES NOT MATTER FOR REAL ESTATE!
OK, so you ADMIT that they take 50% of the difference between the PURCHASE PRICE and the FINAL SALE. In Business school, we call that PROFIT. If i buy something for a dollar, and sell it for 2, than my DIFFERENCE (aka PROFIT), is 1 dollar. Say that something is real estate, then I am taxed 50% on that 1 dollar, which is 50 cents.
Please don’t argue with me. You just tried to argue with me by defining exactly what profit is, and then completely contradicting yourself.
And i dont need proof from i know nothing so i trust every blog i read .ca, thanks.
Kendal, you’re a lost cause. Try to twist what I said if you want, but I posted links explaining how Capital Gains Tax works in Canada. I’m not really interested in trying to break it down for you any further.
This is the only place so far that people stating RE prices going down.
The official forecast is like this for 2008:
CMHC: up 6.5 %
EREB: up 4 %
CREA: up 4-8 %
REMAX: up 1 %
ROYAL
LEPAGE: up 1 %
EDMONTON
RE
INVESTOR: up 8 %
Sorry people, but you, on this blog are the only ones, who says prices will decline.
The last link you posted states:
If the transaction is a capital gain (principal residence, summer cottage, second home, rental home, etc.), only 50% of the gain is taxable.
which is EXACTLY what I am arguing.
The other links you posted have to do with investment capital gains, which I am not talking about.
I am not a lost cause, I am right, you are wrong.
But that’s ok, you are just on this site so much to justify to yourself that you made a good decision by renting.
By the way, that link you posted (which is someones personal opinion I may add), is wrong. Principal residency sales DO NOT pay capital gains. I don’t know why they clump that in there with the cottage, second home, rental property group. Just shows, that you are getting your sources from stupid people who have no idea what they are talking about.
Oh, but don’t worry. I don’t have a 5 year education in this exact topic. I am sure you are much more qualified.
Yes Kendal, only 50% of the gain is taxed.
$100,000 profit selling your home = $50,000 Capital Gain added to your tax form. You don’t lose that entire $50,000 to taxes. It’s just added to your taxable income as a capital gain.
You said:
“First, you pay 50% tax of the capital gains. (income doesnt matteR). Therefore, If you make 200k, you will have to pay 100k in income tax.”
—–
And yes, I’m just here to justify my decision to rent. I guess it would have been a good decision to buy when I moved here in June 2007. My life is horrible right now, I look at people like you and have trouble motivating myself to get up in the morning. Please, allow me to hang out with you guys? I know I’m just a renter, but I promise to stop being a bear if you let me hang out with you.
I just checked Mike Fotiou site
-Calgary MLS Daily Stats- in Calgary, Feb 1- Feb 5,
SFH Prices at $ 475,457
Medium Prices at $ 435,000
Condo at $ 311,302 and
Condo Median at $ 298,600….
all numbers are up by huge margin…..
and they have 7000+ houses and 2500+ condos listed for sale.
Who said that high inventory means lower prices?
karl,
Would you expect those groups to forecast a decline and publish it? have they ever forecast a decline in the past (for Vancouver or Toronto in the 90s, or Alberta in early 80s) before it happened?
I remember a Merill Lynch(?) study say Edmonton was 25% overvalued a few months ago. And for Re/Max to have 1% is not very reassuring.
Kendal, you are wrong.
CRA doesn’t take 50% of the PROFIT, it’s just that 50% of the profit is taxable, at your marginal tax rate. In your example you do not pay 50cents tax, but only 50cents are taxable. If your marginal tax rate is, say 30%, than you pay 15c tax. In total, of $1 profit you pay 15c tax.
In other words, only 50% of your capital gain count as INCOME.
If you have non-capital gains (like business income) then 100% of that income is taxable.
The only reason at present, that prevents further price ESCALATION in the Edmonton RE market is the high inventory.
Should inventories drop back to a more normal level, immediate, sharp price increase will follow.
Some other markets, like Calgary still manage to gain in RE prices in such conditions.
Karl,
These price gains your are mentioning are just temporary.
Did you happen to see Bob Truman’s predictions for the remaining month of February?
“Feb 3
There’s a possibility that by the end of February, we’ll be seeing some year-over-year declines in prices. As I said on Jan 30, I expect prices for the remainder of the year to fluctuate about 5%, up or down, from where they are now. If the SFH median price declines 5% in Feb, that would put the price at $387,600, which would be down substantially from Feb ’07($408,000). Will that have any effect on buyer psychology? That’s why I believe we’ll be seeing a lot more year-to-date comparisons from CREB and realtors. It will then still show a stable market. Year-to-date prices include all sales from the past 12 months. It’s the lower table that I’ve had on the front page of my website for quite some time. If it doesn’t happen in February, then in March for sure. The median price in March 2007 of $427,000 seems just too far out of reach.”
Furthermore, read this article that ran in the Herald today:
http://www.canada.com/calgaryherald/news/story.html?id=3c0c225c-718a-4bd8-9636-1a515d97418e&k=39733
Calgary’s rental squeeze to ease
Mario Toneguzzi, Calgary Herald
Published: Tuesday, February 05, 2008
Rental demand in Calgary is projected to moderate in 2008 and the vacancy rate is forecast to rise slightly because of a drop in net migration to the city, says a new report.
The report by Canada Mortgage and Housing Corporation says vacancy rates bottomed out in 2006 at the record low level of 0.5 per cent and rose to 1.5 per cent in 2007. It is forecast to rise to two per cent this year.
And after two consecutive years of double-digit increases in the same sample rent of existing structures, rents are unlikely to rise as rapidly in 2008.
The CMHC report said the average rent for a two-bedroom apartment in the Calgary Census Metropolitan Area was $1,089 in 2007 and that is projected to rise to $1,140 this year and to $1,175 in 2009.
The vacancy rate is also expected to be two per cent in 2009.
The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.
Net migration in Alberta was a record in 2006 at 81,000 people. The numbers are not yet in for 2007 but the CMHC is estimating net migration to be 47,000 and that is forecast to decline to 42,000 in 2008.
“The demand for rental accommodation remains strong in the Calgary CMA but a drop in net migration has begun to ease demand pressure in the rental market,” said the CMHC’s first quarter Housing Market Outlook report.
“Improved job markets in other provinces and the rapid escalation of housing costs relative to other parts of the country will contribute to lower levels of net migration to Calgary.”
The report said higher homeownership costs will keep some tenants in the rental market but lower migration flows are the primary risk to the 2008 vacancy rate forecast.
Huh? Improved job markets in other provinces? B.C. has laid off over 12,000 workers in the forest industry. Ont. & Quebec manufacturing are just stating to suffer with no end in site. Alberta is the place to be.
Karl, Dude!
Your not seriously placing all your hope in the economic forecasts of the Realtors; Banks and Mortgage Insurers are you? Just so we’re all on the same page these people will NEVER forecast a correction in the housing market.
Banks love mortgages and if they can convince you into a 25+ year mortgage they love it even more. You’ll pay the value of your house in interest back to them. And Mortgages are one of the safest parts of a banks loan portfolio. And typically a big part of their business and loan growth. So they’ll never say that “housing is going to correct” because that’s basically shooting themselves in the foot.
Next, let’s go with Realtors. And please don’t take this as a dig at Sara and Sheldon, because it’s not. But honestly, these people make their bread and butter on both the transaction and the value of your house. Remeber, the make a % of the settling price. I suspect it takes the same amount of effort to sell the same hous regardless of the price being $250,000 or $400,000. But when your earning a percentage of the final price selling the same house, ceteris parabis (that’s an economic term for all else equal), for $400,000 for the same effort sure looks a little be better. No wonder EREB’s statement is ladden with “it’s proof people have accepted the new price level”. Please give me a break with this propaganda.
Lastly, mortgage insurers. This ones my favourite. Lets’ believe everything CMHC says. Yes, lets. These people make money insurining mortgages to banks and earn income on the same. Income that would fall if the housing market corrected and new loan growth softened. But that’s not all. These people also may loose money since they know have to start paying the mortgages they previously insured. Especially if people start wlking away from their mortgages.
There is also a self fulfilling component that if these individuals said the market was/is correcting then it would correct. So why anybody would expect them to say the market is going to go down is beyond me. I suspect they continue saying it’s going up until they’re unable to refute the facts.
Nate, now I see. Yeah I live down near southgate too. 900 is still a pretty decent price. I guess my brother rents in that area, just south of 51st and pays I think $850 for a 3 bedroom but he gets a police discount and the building has a lot of long time tenants.
O,
The examples, I posted earlier, are all credible institutions and in 2007,
time to time they notoriously underestimated the market in terms of price increases.
Maybe, just maybe they are wrong once again and the price increase will be much greater, than 4-5-6 %
or 8 % in 2008?
Karl,
“in 2007,
time to time they notoriously underestimated the market in terms of price increases.”
You mean like this?
http://albertarealestatewatch.blogspot.com/2007/12/ereb-edmonton-average-price-and.html
Karl,
How can you personally justify that house prices will be increasing this year?
As mentioned before those organisation you mentioned are all part of the Real Estate Supply chain and therefore will never forecast anything negative.
Have you recently looked at the sales numbers for Calgary?
Bob Truman even recognises the fact that current February sales are down a “whopping 47%” as compared to February of 2007.
With net migration decreasing YoY and with inventory rising 100 listings everyday…how can prices stay consistently flat or even increase?
With the current economic fundamentals in place, prices have only one direction to go and that’s down.
It will not happen overnight but will take months but prices can’t stay at their current terms.
Jane,
Your points about inventory are well taken. There is too much of it for big increases. However It looks as though Edmonton and Calgary can handle the current high level of inventory at this time of year, when sales are strongest. There is no doubt sales are strong…..better sales than Jan of 06, are you kidding me. Investor activity was through the roof in Jan of 06….I know plenty of them. From the feedback we’ve been getting from friends (my wife sells for a builder since 2003) in various jobs throughout the new and used real estate market, that activity has all but dried up. I’m speaking of SFH for the most part as we don’t have many contacts in the condo market. This tells me 2 things:
1: The people buying homes, both new and used are going to actually live in them.
2: There is a real underlying strength in the market, with many people holding off since June last year ready to enter the market.
Now as for the present inventory levels….who knows for sure how many were fishing at the end of last year, how many have since rented out their listings and how many are actually going to come back on the market. To tell you truth I’m very surprised that the level (according to Bob Truman) is virtually unchanged Dec/Jan for SFH. I would have thought the inventory would have gone up way more than that.
Bottom line, 7000-8000 listings during peak buying season (Jan-May) doesn’t hurt us, 10,000 in September most certainly does!
As for forecasts, they’re just that, educated guesses based on a whole series of assumptions. I see a lot of people on this site slagging the various forecast agencies as having ulterior motives, and maybe they do, but I looked up the only 2 forecasts I could find when I googled for 2007(they were kind of hard to find). These were for Edmonton 2007
1.) Remax said 10%
2.) Edmonton real estate board said 15%
Considering we ended up with what people….13 point something to the good, you might want to scale back a smidge on the pooh-poohing.
Personally, and this is just my opinion, I put more faith in this years forecast because the unknown speculator factor isn’t as important. When you have to fudge an assumption like that, it can really mess up a forecast.
Itchy,
To some degree, your post is a contraditction in itself.
In order for a price increase of 13%, there is a REQUIREMENT in the marketplace for DEMAND. This demand translates into sales, which are falling back down to more “normal” levels pre boom days.
Currently, inventory levels are set to explode as alot of sellers are preparing to list in the springtime to participate in the highly anticipated hyped “spring uptick.”
In order for prices to increase, the current inventory levels have to be absorbed and that is simply not happening.
With respect to you mentioning the two quoted sources, RE/MAX etc DOES NOT forecast with an account for speculation. Are you kidding me?
How do you even begin to forecast for speculative activity in a market? It’s impossible.
You can only tell once the properties are purchased and remain vacant, then you can formulate what portion of inventory is meant for speculation.
So to sum up your post, you acknowledge that sales will be down this year because specualtion activity is decreased.
Less demand (sales) will allow inventory to balloon further to even higher record levels.
With this happening, it is economically impossible to have a further increase in prices to even 13%.
A 5% increase is more realistic and even pushing at the envelope of “make believe.”
Wow, some of the tax law interpretation expressed on this site are scary. If anyone wants to learn about how real estate is taxed, please talk to a real accountant, or at the very least visit the CRA site.
Joe,
You completely misread my post.
1st of all I didn’t say an increase of 13% for 2008…I said prices increased 13% for 2007, That’s fact. I went back and saw what the forecasts were for 2007 ie; in January 2007 what did they say, and I could only find 2…Remax and EREB which said 10 and 15 percent respectively. So my point was they were pretty close. The forecasts I’ve seen for this year (2008) range from a low of 1% up to a high of 8% up….so if you take a middle ground again of say 4.5%….I think that is not unrealistic. I also said I had better faith this year because the market is less speculative, and you better believe that when these companies come out with forecasts……how speculative a market is, is right at the top of the list(as it relates directly to inventory/supply/demand) for making an informed forecast along with migration, interest rates, affordability and job and GDP forecasts….and yes it is really hard to predict. They talk directly to the new home builders who give them their opinion. The problem is, when you sign the papers for a new home from the builder, you don’t check a box that says INVESTOR. If someone comes in and says I want to build 5 houses, well then it’s obvious. If MOM and POP come in and say we want to build a house I guess you assume they’ll live in it. Want an example? There is a neighbourhood (that shall remain nameless to protect the innocent haha)in Beaumont that was selling in 2006. They sold I believe 24 houses….all to individual buyers. Low and behold, it comes summer of 2007 and 22 of the 24 are up for resale! It’s that kind of thing that the resale market is dealing with now. Do you think investors are in there right now buying more new homes? That’s an extreme case but it’s more common than you might think.
I don’t think I said demand is in a bad way. In fact I said I’m surprised that we’ve had the 2nd best Jan. on record, with a real lack of speculation to drive up the numbers. Sales are off in the new home market…SFH building permits are down every month since Sept/07 if I’m not mistaken. This means that the huge glut of those vacant brand new homes that you see, should start to subside this summer and fall. I also said that I expected inventory to be up a lot more than it is right now and the real crux will be reached from July on when sales normally weaken for the last half of the year. If we’re at 7000 at Sept then no big deal..if we’re at 10,000 then prices will likely behave much as they did Sept/Oct/NOV 2007.
Hope this clears it up for you a bit
cheers
Itchy,
The EREB revised its estimate in early April. The second estimate wasn’t very good:
http://albertarealestatewatch.blogspot.com/2007/12/ereb-edmonton-average-price-and.html
itchy
Was the Beaumont area Beau Val. I was one of the buyers the people who sold made $55000 and up. I am renting mine. There is only one owner occupied house.
rj,
I guess that just goes to show you….go with your first instinct because it’s probably right. Since their 15% was just about used up by April, they probably wanted to save face….bad mistake. Coincidentaly, Apr/May was just when all the new investor houses were showing up by the hundreds, June prices started going down as inventory floods the market. This is exactly my point about trying to figure out how speculative a market is.
speculator,
Well the cat’s out of the bag….yes it was Beau Val. I mean isn’t that something, 1 owner occupied house on an entire block. That phenomenon will not be repeated this year anywhere, because of the exporting of huge amounts of our investors to Saskatchewan, lol.
By the way I called up Regina mls because I lived there from 95/02 and I’m curious. So I asked for all the listings in the city from 100,000.00 to 1,000,000.00 and it came up with 156. Since Regina is about 20% the size of Edmonton that works out to about 780 homes available if it was Edmonton. Yikes, anyone moving back to Sask. thinking they are going to make any money has got to be dreaming.
Does anybody know where I can find statistics for Sherwood Park.
I am preparing to sell my home (2150 sqft 2 storey, pie lot, RV parking, some hard wood, built 2001, nice landscaping etc) and am trying to price it right. My plan is to find the right price for mrkt then lowball on Comfree, to save commissions and make a quick sale.
Another question: The landscaping makes the neighbours disappear in the spring, and the place would show a lot better, should I wait or will I be lost with all the other listings that always come up in the spring?
Thanks
Without getting dragged into the fray that is going on here – net migration to Alberta in 2008 of 42 thousand people is still 42 thousand new people that will be looking for a roof to put over their heads. (increased demand)
Yes inventory is higher, but new home starts are projected to retreat from the record high levels of ’06 and ’07 (less supply)
My simple economics states that prices should stay relatively constant with marginal increases as some of the forecasters have predicted.
Just my $.02 (:
Rhettro,
Housing starts are going down to adjust for the decrease in demand. That’s why there is a slowdown of construction as compared to 2006 and 2007. Developers are not going to waste money developing new properties if no one is going to buy them.
And you are assuming that all 42,000 people moving to Alberta want to buy a house. How many of those are transient workers? Immigrants? Etc.
Don’t forget that Alberta is not a vacuum. People will also be moving out of the province as well.
Rhettro, I have been looking for stats on net migration into Alberta. Could you tell me where you found that info? I remember that Alberta had a net out migration late last year and I believe that this stat compared to starts is the most important statistical comparison when predicting a bust in the market.
Gus
Here
http://www.statcan.ca/english/freepub/91-002-XIE/2007003/part1.htm
finally sold my house…
I was one of the dual mortgage people that you here talk about on here. Sold my rutherford area house on Feb. 1 for 110% of purchase price…we only had 2 months of overlap. Given the number of houses in competition with ours, I feel lucky to have sold so soon.
Rick and Gus,
I was basing my info on Jane’s post above, and naturally not all new albertans in 2008 will be looking to purchase a home but my point was there still will be a demand for homes – whether you and I are buying them to rent out (vacancy rates are still extremely low) or others are buying for their first time in Alberta.
You are right about the stats of migration being more important in assessing market fluctuations, however, even with this negative migration quarter in late 2007, overall for the year of 2008 projections show an overall increase in migration, this will eat up some of the excess inventory and in the meantime there will be a lesser percentage of new homes being built and put up for sale.
Again – only my opinion, and I was not predicting 20% increases, rather sensing that some stability seems to have finally returned to Alberta (except Fort Mac!)
Sounds like the Calgary market is moving right along.
http://www.bobtruman.com/Whats_New/page_1691541.html
Take a look at Reigna MLS. Their higher end homes are priced the same as Edmonton. What’s up with that?
red,
The pricing numbers are surprising, but sales at a 7 year low should be an indicator that regardless of what the average price is, only a select few are buying at this time. Should be interesting to see how the Calgary market plays out given the slumping sales vs higher inventory and amazingly the higher pricing on homes.
One catch to this could be, are their more high ticket homes (2500sq ft and over) homes going to market all of a sudden and consequently inflating the average price, or is it people jacking up the prices in preperation for the annual spring sell off?
Edmonton prices are up, too , by a large margin.
SFH: $ 406,386 +$ 17,000
Med: $ 378,500 +$ 13,500
Condo: $ 257,735 +$ 7000
Med: $ 250,000 +$ 6000
The market is getting hot, hot, hot!!!!!
Karl, the market is freezing, look at the S/L ratio of 23%
))
hot, hot, hot?
Wow, yeah, guess your ignoring the SP/SF part.
I’d wait a week or two before I’d declare the market being HOT HOT HOT since sales are down, inventories up and the SP/SF is down. Also inventory is up 68% Month over Month for the same week in January.
Things are looking up no doubt however.
I see the Edmonton stats as mixed. All price measures up except price per square foot, listings up, sales weak.
Just a couple of comments on Bob Truman’s stats and some of the observations people have made.
Two things on the SFH inventory stand out to me,
1)If there were 475 new listings and total sales were 153…how does total inventory go from 3511 to 3554….a difference of only 43? I’m guessing there were some cancellations, expirations etc., but I’m wondering if pending sales are not counted as sales but also not counted in the available inventory. If so there would have to be a lot of pending sales (I really wish we could get a pending sales number as well).
2.) I would expect the inventory numbers to jump the 1st week of the month simply because that’s when a higher percentage of people list…..just as I would expect inventory numbers to drop on the last day of the month.
Most importantly though, it looks as though people are willing to spend more again. The fact that 450,000 gets you more house now is good, but it’s still 450,000.
Lastly, I wouldn’t put too much stock in any number that comes out that is based on 1 week of sales. However part of the problem with the market was a crisis of confidence and if we can get more headlines like 2nd best Jan for sales, Cdn job numbers like we saw today and the granddaddy, Prices rise 4% in Feb, rather than U.S. tanking and Canada going with it…..royalty reviews and falling house prices, maybe we’ll eke out a small gain in 08.
WOW! The price per sqft is now $267. That’s a 18.6% retreat from the 2007 peak of $328.